Telekom Austria Ag · VIE:TKA
Telekom Austria — FY2016 Earnings Presentation
52 slides from Telekom Austria's earnings presentation, Jan 30, 2017
Slide 1: Results for the full year and fourth quarter 2016
Results for the full year and fourth quarter 2016 Vienna, 30 January 2017
Slide 2: Cautionary statement
Cautionary statement 'This presentation contains forward-looking statements. These forward-looking statements are usually accompanied by words such as 'believe', 'intend', 'anticipate', 'plan', 'expect' and similar expressions. Actual events may differ materially from those anticipated in these forw
Slide 3: Operational and financial highlights for the full year 2016
Operational and financial highlights for the full year 2016 Results for the full year and fourth quarter 2016 3
Slide 4: FY 2016 – Increasing operative revenues and EBITDA reflect strong operational development
FY 2016 – Increasing operative revenues and EBITDA reflect strong operational development in 2016 Revenues (proforma*) EUR 4,211.5 mn / -0.5% yoy EBITDA (proforma*) EUR 1,354.3 mn / -2.6% yoy Net income (reported) EUR 413.2 mn / +5.2% yoy Capex (reported) EUR 764.1 mn / -2.6% yoy One-off effects in
Slide 5: Operational highlights 2016 & Outlook 2017
Operational highlights 2016 & Outlook 2017 Operations in 2016 strengthened Outlook 2017* > Mobile customer base stable Revenues: approx. + 1% y-o-y > 1.3% proforma RGU growth driven by CAPEX: approx. EUR 725 mn CEE countries due to attractive fixed- Dividend: EUR 0.20 / share line propositions > Rev
Slide 6: Key financial developments for the fourth quarter 2016
Key financial developments for the fourth quarter 2016 Results for the full year and fourth quarter 2016 6
Slide 7: Q4 2016: Adjusted EBITDA growth due to improved service revenues and cost savings
Q4 2016: Adjusted EBITDA growth due to improved service revenues and cost savings Reported Proforma Group (in EUR million) Q4 2016 Q4 2015 % change Total revenues 1,098.2 1,107.9 -0.9% EBITDA 275.1 334.1 -17.7% CAPEX 226.7 323.5 -29.9% > Proforma Group total revenues declined by 0.9% y-o-y and grew
Slide 8: Austria: OPEX efficiency more than compensates for roaming losses
Austria: OPEX efficiency more than compensates for roaming losses ARPU ARPL Operational data (in EUR) (in EUR) > Stable subscriber base (excl. M2M) as increase in Δ: -6.0% Δ: -1.9% high-value segment almost offsets no-frills loss 28.7 28.2 > Stable operative ARPU excl. roaming due to 15.3 14.4 incre
Slide 9: CEE: Ongoing improvement in service revenue trends; EBITDA impacted by market-related costs
CEE: Ongoing improvement in service revenue trends; EBITDA impacted by market-related costs EBITDA Highlights CEE (reported, in EUR mn) Bulgaria: > 2.6% growth in total revenues benefits from higher EUR 25.2 mn EUR 19.0 mn EUR 40.6 mn equipment revenues & operational improvements: both Δ: -6.5 mn Δ:
Slide 10: Build-up in working capital stabilised in Q4 in a year-on-year comparison
Build-up in working capital stabilised in Q4 in a year-on-year comparison (in EUR million) Q4 2016 Q4 2015 % change 1-12 M 2016 FY 2015 % change Net cash flow from operating activities 327.7 228.4 43.5% 1,195.5 1,228.4 -2.7% Capital expenditures paid -194.4 -205.4 -5.3% -816.5 -731.1 11.7% Proceeds
Slide 11: Focus points
Focus points Results for the full year and fourth quarter 2016 11
Slide 12: Acquisitions of Atlant in Belarus and Metronet in Croatia to strengthen fixed-line positioning
Acquisitions of Atlant in Belarus and Metronet in Croatia to strengthen fixed-line positioning Belarus Croatia > Atlant is leading privatly owned fixed-line > ~90% corporate customers operator in Belarus > Present in 66 cities (reaching 85% of all business customers) > Products offered > Products of
Slide 13: EUR 38 mn negative roaming impact on EBITDA in 2016
EUR 38 mn negative roaming impact on EBITDA in 2016 overshadowed operative improvement Roaming impact EBITDA 2016 > Higher than expected elasticity, especially for data ~ EUR 38 mn > Roaming impact in Group EBITDA for 2017 In line with expectations expected to be at 2016 level Open legislative issue
Slide 14: Solid OPEX savings & better service revenues mitigate non-operating effects in Group EBITDA
Solid OPEX savings & better service revenues mitigate non-operating effects in Group EBITDA Service Equipment Non-operating effects OOI OPEX revenues margin 1,390.5 M&A 1,354.3 EBITDA One-offs One-offs FX Roaming Mobile Fixed OOI Handset Subsidy Opex Opex Add. EBITDA 2015 2015 2016 & other reeval- i
Slide 15: CAPEX-efficient fibre roll-out in Austria: Hybrid modem increases coverage
CAPEX-efficient fibre roll-out in Austria: Hybrid modem increases coverage and supports upselling Housholds passed Fixed-line network 2015 (coverage in %; year-end figures) Fixed-line network 2016 Fibre roll-out well on track 99% Hybrid 96% 93% 91% 50% of households covered with 30-Mbps-product on f
Slide 16: velcom leading telecom provider worldwide with full virtualization of all core network functions
velcom leading telecom provider worldwide with full virtualization of all core network functions > Virtualisation of all core network functions: Data/EPC, Voice/MSC, HSS/HLR etc. > Provides high and flexible scalability > Individual, efficient and demand-driven resource deployment > New services can
Slide 17: Enlarging the product portfolio with Cloud and IoT services
Enlarging the product portfolio with Cloud and IoT services A1 Marketplace launched in November 2016 > Generate new business in the field of digital services with new cloud-based, scalable solutions > Partner for digital transformation of small and medium sized enterprises > Key portfolio pillars in
Slide 18: Outlook for the full year 2017
Outlook for the full year 2017 Results for the full year and fourth quarter 2016 18
Slide 19: Telekom Austria Group outlook for the full year 2017
Telekom Austria Group outlook for the full year 2017 30 January 2017 Consensus 2017 Total revenues approx. +1% EUR 4,209 mn CAPEX approx. EUR 725 mn EUR 774 mn Proposed dividend EUR 0.20 / share - > Outlook based on reported figures and constant currencies except for Belarus (assumed devaluation of
Slide 20: Appendix 1
Appendix 1 Results for the full year and fourth quarter 2016 20
Slide 21: The leading regional communications player providing convergent telecommunication services
The leading regional communications player providing convergent telecommunication services as of 31 December 2016 (in ‘000) Austria Slovenia Belarus Mobile market position #1 Mobile market position #2 Mobile market position #2 Mobile subscriber: Mobile subscriber: Mobile subscriber: > 5,972 (Q4 2015
Slide 22: Telekom Austria Group – Profit and Loss
Telekom Austria Group – Profit and Loss (in EUR million) Q4 2016 Q4 2015 % change Service Revenues 956.9 966.6 -1.0% Equipment Revenues 141.4 139.8 1.1% Total Revenues 1,098.2 1,106.4 -0.7% Cost of Service -358.3 -349.9 n.m. Cost of Equipment -166.2 -163.2 n.m. Selling, General & Administrative Expe
Slide 23: Telekom Austria Group – Total revenues & costs and expenses per segment
Telekom Austria Group – Total revenues & costs and expenses per segment Telekom Austria Group - Total Revenue Split Total Revenues (in EUR million) Q4 2016 Q4 2015 % change Austria 662.3 680.8 -2.7% Bulgaria 108.7 106.0 2.6% Croatia 103.2 95.7 7.8% Belarus 90.6 83.0 9.3% Slovenia 55.1 64.8 -14.9% Re
Slide 24: Telekom Austria Group – Headcount development
Telekom Austria Group – Headcount development FTE (Average Period) Q4 2016 Q4 2015 % change Austria 8,389 8,556 -2.0% International 9,290 8,958 3.7% Corporate 234 204 15.1% Telekom Austria Group 17,913 17,718 1.1% FTE (End of Period) Q4 2016 Q4 2015 % change Austria 8,352 8,512 -1.9% International 9
Slide 25: Telekom Austria Group – Capital expenditure split
Telekom Austria Group – Capital expenditure split Capital Expenditures (in EUR million) Q4 2016 Q4 2015 % change Austria 132.1 154.3 -14.4% Bulgaria 23.9 31.3 -23.5% Croatia 26.6 37.7 -29.5% Belarus 17.3 35.7 -51.6% Slovenia 9.4 6.7 40.0% Republic of Serbia 8.3 48.0 -82.7% Republic of Macedonia 11.7
Slide 26: Telekom Austria Group – Net debt
Telekom Austria Group – Net debt Net Debt* (in EUR million) 31 December 2016 31 December 2015 % change Long-term Debt 2,303.5 2,584.1 -10.9% Short-term Borrowings 500.1 810.4 -38.3% Cash and Cash Equivalents and Short-term Investments -464.2 -911.5 n.m. Net Debt of Telekom Austria Group 2,339.4 2,48
Slide 27: Telekom Austria Group – Debt maturity profile
Telekom Austria Group – Debt maturity profile Debt maturity profile* (in EUR million) 744.9 743.9 500.1 494.3 298.3 0.0 22.1 0.0 0.0 0.0 0.0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 > EUR 2,803.6** mn short-and long-term borrowings as of 31 December 2016 > Average cost of debt of appro
Slide 28: Telekom Austria Group – Debt profile
Telekom Austria Group – Debt profile Overview debt instruments Fixed/floating mix 0.8% 99.2% 100.0% Loans Bonds Fixed Lines of credit Ratings > Undrawn committed credit lines > S&P: BBB (outlook stable) amounting to EUR 1,000 mn > Moody’s: Baa2 (outlook stable) > Average term to maturity of approx.
Slide 29: Segment Austria – Fixed-line key performance indicators
Segment Austria – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 3,534.4 3,530.8 3,513.2 3,501.4 3,495.5 28.7 28.1 28.0 27.9 28.2 192.5 188.3 186.9 184.9 186.3 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPL ARPL-rel
Slide 30: Segment Austria – Mobile key performance indicators
Segment Austria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 1.6 1.6 1.6 15.3 14.9 14.5 14.9 14.4 1.4 1.4 263.4 259.1 255.3 264.3 256.2 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPU Service Revenues Subsidies Mobile penetra
Slide 31: Segment Austria – Broadband market split
Segment Austria – Broadband market split Market share total broadband Market share mobile broadband (in %) (in %) 0.1 0.8 3.4 3.6 21.6 21.3 Others Hofer T-Mobile 41.2 40.3 33.7 34.3 Mobile Broadband Hutchison Other Operators A1 Unbundled Lines 4.0 3.7 33.6 34.0 Cable 16.0 16.0 Q4 15 Q4 16 A1 Mobile
Slide 32: Segment Austria – Voice market split
Segment Austria – Voice market split Market share total minutes Market share voice RGUs (in %) (in %) 13.2 13.3 3.6 3.4 Mobile 22.0 22.8 Others 88.7 89.3 Fixed Line Others UPC Tele2/UTA Fixed Line Telekom A1 Austria 61.3 60.5 4.4 4.2 6.9 6.5 Q4 15 Q4 16 Q4 15 Q4 16 Results for the full year and four
Slide 33: Segment Bulgaria – Fixed-line key performance indicators
Segment Bulgaria – Fixed-line key performance indicators ARPL* & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 1,011.9 1,019.1 1,025.5 1,019.3 1,018.9 10.8 10.8 10.8 10.9 10.8 17.5 17.4 17.6 17.7 17.6 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPL ARPL-releva
Slide 34: Segment Bulgaria – Mobile key performance indicators
Segment Bulgaria – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 2.3 2.1 2.2 2.0 5.3 5.3 5.5 5.8 5.5 1.6 67.2 65.9 67.5 71.1 67.4 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPU Service Revenues Subsidies Mobile penetration (in
Slide 35: Segment Croatia – Fixed-line key performance indicators
Segment Croatia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 23.6 23.3 23.6 23.6 23.8 553.0 576.8 593.7 607.4 620.1 17.9 18.4 19.4 19.7 20.3 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPL ARPL-relevant revenues
Slide 36: Segment Croatia – Mobile key performance indicators
Segment Croatia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 13.3 4.4 11.9 3.6 11.1 11.1 11.3 2.4 2.4 2.0 71.5 57.1 61.3 58.7 60.0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPU Service Revenues Subsidies Mobile penetration
Slide 37: Segment Belarus – Mobile key performance indicators
Segment Belarus – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 4.6 4.2 4.1 4.3 1.6 1.6 1.6 1.7 3.5 1.4 59.6 63.2 67.8 61.9 52.0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPU Service Revenues Subsidies Mobile penetration (in E
Slide 38: Segment Slovenia – Fixed-line key performance indicators
Segment Slovenia – Fixed-line key performance indicators ARPL & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 37.7 36.5 36.6 170.7 172.0 172.0 34.2 34.6 147.6 159.7 7.4 7.4 7.7 7.3 7.3 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPL ARPL-relevant revenues Fixe
Slide 39: Segment Slovenia – Mobile key performance indicators
Segment Slovenia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 15.8 15.9 16.7 1.6 1.6 15.3 15.4 1.5 1.5 1.3 33.5 32.6 34.2 35.9 33.0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPU Service Revenues Subsidies Mobile penetration
Slide 40: Segment Serbia – Mobile key performance indicators
Segment Serbia – Mobile key performance indicators ARPU & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.0 5.7 5.7 4.1 5.5 5.3 3.6 3.4 3.1 3.0 37.9 34.7 35.5 35.8 34.0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPU Service Revenues Subsidies Mobile penetration (in EU
Slide 41: Segment Macedonia – Fixed-line key performance indicators
Segment Macedonia – Fixed-line key performance indicators ARPL* & ARPL-relevant revenues Total RGUs (in EUR, in EUR million) (in ‘000) 12.6 12.3 12.4 12.5 12.2 304.5 307.1 314.3 307.2 305.7 5.6 5.3 5.3 5.3 5.2 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPL ARPL-relevant revenues Fi
Slide 42: Segment Macedonia – Mobile key performance indicators
Segment Macedonia – Mobile key performance indicators ARPU* & Service revenues Churn rate (in EUR, in EUR million) (in %) 6.4 3.3 5.8 5.8 6.1 6.0 3.0 2.6 2.4 2.2 20.7 20.2 20.8 21.8 20.1 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 ARPU Service Revenues Subsidies Mobile penetration (i
Slide 43: Appendix 2 – Regulatory topics
Appendix 2 – Regulatory topics Results for the full year and fourth quarter 2016 43
Slide 44: Glide Path of Mobile Termination Rates
Glide Path of Mobile Termination Rates Jan Jul Jan Jul Jan Jul 2015 2015 2016 2016 2017 2017 Austria (EUR) 0,008049 0.008049 0.008049 0.008049 0.008049 0.008049 Bulgaria (BGN) 0.019 0.019 0.019 0.019 0.014 0.014 Croatia (HRK) 0.063* 0.063* 0.063* 0.063* 0.063* 0.047* MTS 250/125 MTS 250/125 MTS 250/
Slide 45: EU roaming price regulation
EU roaming price regulation RETAIL (in EURc) Before July 2012 July 2013 July 2014 30 April 2016 15 July 2017 domestic tariff Data (per MB) none 70 45 20 domestic tariff + 5* Voice-calls made domestic tariff 35 29 24 19 domestic tariff (per minute) + 5* Voice-calls received weighted 11 8 7 5 0 (per m
Slide 46: Upcoming spectrum tenders/prolongations/assignments
Upcoming spectrum tenders/prolongations/ assignments Expected Comments 2019 (2100 MHz) Austria - 2020 (700 MHz) 2017 (800 MHz) Bulgaria 2017 (2600 MHz) - 2019 (2100 MHz) 2017 (2100 MHz) Croatia - 2020 (700 MHz) Belarus 2017 (2100 MHz) Automatic renewal of currently frequencies. 2017 (3500 MHZ) Slove
Slide 47: Appendix 3 – Personnel restructuring in Austria
Appendix 3 – Personnel restructuring in Austria Results for the full year and fourth quarter 2016 47
Slide 48: Quarterly Overview – Restructuring charges and provision vs. FTE
Quartely Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FTE reduction 9.2 21.0 1.8 63.0 Transfer to government 0 1 2 3 Servicekom contribution -18.4 -20.1 -29.6* -28.9* * Social plans 31 63 16 159 Interest
Slide 49: Full Year Overview – Restructuring charges and provision vs. FTE
Full Year Overview – Restructuring charges and provision vs. FTE Overview restructuring charges FTEs addressed (in EUR million) 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 FTE reduction 274.3 49.9 149.0 86.4* 69.5** 95.0 Transfer to government 106 44 22 52 49 6 Servicekom contributio
Slide 50: Overview – Cash flow impact of restructuring
Overview – Cash flow impact of restructuring Overview cash flow impact* (in EUR million) Total cash flow impact > Total cash flow impact comprises 2011 93.4 old and new programmes 2012 104.0 2013 108.0 > Cash flow impact for Q4 2016 of 2014 107.1 EUR 26.6 mn 2015 101.9 > Total cash flow impact Q1 20
Slide 51: Appendix 4 – Corporate sustainability
Appendix 4 – Corporate sustainability Results for the full year and fourth quarter 2016 51
Slide 52: Key figures – Corporate Sustainability
Key figures – Corporate Sustainability Selected Group-wide KPIs Ratings Products: Providing Responsible Products 2015 Customer contacts in customer service ('000) 38,175 Environment 2015 ›Classification: B ›Classification: B- Total CO2 Emissions (Scope 1+2 in tonnes) 187,383 (99 points out of 100) E